Home-service companies waste money on ads without tracking whether they're profitable. Phil Risher calls it operational leakage: they don't measure return on investment or track lead quality, so they keep spending based on guesses instead of data.
And to be honest with you, most home service businesses are not under-marketed, they're under-structured. They're willing to spend money on marketing, they're willing to spend money on ads, they're willing to throw stuff out there. They don't have the structure to know if it's actually working and to capitalize on all the leads that they're getting in. So there's two big issues. One, they don't know if it's working. They're spending money on ads, they don't know if they made money or not. So they just keep spending money because they think they are. And then two, they're spending money to get leads, but they don't have a way to capture all the leads through their system 'cause they're not tracking their numbers. They're not tracking their booking rate or their close rate, so they don't know if they get more leads, are they actually good or not? So then they just spend a bunch more money and hope that they grow.
